BUS 121 UA 3-2 Answers from instructor

BUS 121 UA 3-2 Answers from instructor - 6. List two ways...

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UA 3-2 UNIT 3-2 1. Describe the legal forms of business ownership? sole proprietorship having one owner; partnership having two or more owners; corporation having one or more stockholders as owner(s). 2. What are the advantages of each legal form? sole proprietorship is easy to start and stop; partnership is easy to start and stop and has more owners to manage and help finance; corporation provides owner(s) limited liability. 3. Why is limited liability important to a stockholder? stockholder can never lose personal assets if business fails. stockholder can only lose what was paid for the stock. 4. Explain how a corporation can be owned by one person. only one person bought the stock. many sole proprietors incorporate and keep ownership of all the stock. in fact, most corporations in the U.S. are one owner corporations operated out of the owner's home. 5. Tell the reason a sole proprietor would want to incorporate. to get limited liability.
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Unformatted text preview: 6. List two ways stockholders are rewarded for their investment. dividends, which are distribution of company profit, and increase in stock value. 7. List the 7 requirements for negotiability. read in the chapter. negotiable instruments are treated the same as cash. the most common one is a check. 8. Who are the parties to a bank draft contract? Which party makes the payment? debtor (drawer) and the bank (drawee). the bank pays the creditor on demand after getting permission in advance from the debtor. 9. Explain the difference between a qualified endorsement and a restrictive endorsement. qualified limits liability of endorser; restrictive says what endorser may do with the instrument. maker (drawer) puts on restriction; endorser (payee) puts on qualification. 10. If a check is forged against your checking account, what is the liability of the drawee? the bank (drawee) is responsible (liable) for putting money back in your account....
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This note was uploaded on 11/18/2011 for the course BUS 121 taught by Professor Smith during the Spring '10 term at Lander.

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